With nearly $200 billion in reported sales in 2011, e-commerce sales are expected to continue to grow over the next several years. In 2012, e-commerce sales in the U.S. topped $225 billion, up 16% from 2011, according to a U.S. Commerce Department estimate.
This is good news for the millions of e-tailers already operating “virtual storefronts.” But with even the smallest of operations now able to reach across the country, it's easier than ever to unintentionally infringe on another individual's or entity's intellectual property rights, including trademarks, copyrights and patents.
If you're considering opening a virtual storefront on the Internet this year, you need to know about intellectual property rights and make sure not to violate someone else's rights. Keeping it legal helps ensure smooth sailing (and hopefully big profits) for your online business.
A trademark is a word, phrase, symbol or design, or a combination of these, which identifies and distinguishes the source of one party's goods or services from those of other parties. Like brick and mortar businesses that offer goods and services to consumers, e-tailers use trademarks to distinguish themselves and their products and services and inform consumers where a product or service comes from.
A trademark can be a valuable asset to an e-tailer's business, making the selection of a trademark an important business decision. An e-tailer will want to make sure not to choose a trademark that would be difficult or impossible to protect, or that would infringe someone else's rights. Indeed, before selecting a trademark, it is important to conduct a complete trademark search, as the results can identify potential problems and can help save you expenses and problems down the line. When it comes to trademark selection, it pays to do your homework from the beginning.
When you first open an e-commerce store, it's natural to want to save yourself time and money by simply copying and slightly customizing page designs, code, content and images from other e-commerce stores already in business. Don't do it. Just because it's easy doesn't mean it's legal. In fact, copying content from another website, without the authorization of the copyright owner, is illegal. As far as the law is concerned, it's like stealing someone else's merchandise.
You also need to be certain that the products you offer are legitimate and not counterfeit or pirated goods. Keep in mind the possibility that suppliers offering prices that seem too good to be true could be selling counterfeit or pirated merchandise.
For example, in a number of lawsuits filed last year against vendors selling products on Amazon's e-commerce platform, Warner Bros. Home Entertainment, claimed that the vendors were distributing pirated copies of movies and television shows in violation of the plaintiff's intellectual property rights. To avoid legal problems, e-tailers should ensure that the products they offer are not counterfeit or pirated.
Patents not only protect inventions, they also protect methods and processes. So if you're thinking about “borrowing” that 1-click ordering technology (patented by Amazon in 1999) or the “Buy It Now” button from eBay (which holds the patent for that method of ordering), think again.
The challenge is to determine what is a patented technology and what is not. Many elements of e-commerce websites are not patented. Nonetheless, that does not mean you can simply copy and paste code when building your site, because the code may nevertheless be protected by copyright. If in doubt, it pays to consult an intellectual property attorney before developing or launching your online e-commerce platform. And, if you've created a technology or software program for your e-commerce site that you believe is patentable, be sure to protect yourself and the technology that you have created.
The Takeaway: Do Your Homework and Play it Straight to Avoid Trouble
As more and more of the physical world moves to the virtual realm, it has become increasingly important to protect your intellectual property and to make sure that you do not violate someone else's rights. The bottom line: when it comes to e-commerce, it pays to do your homework and take the high road. Not only will doing so help you save time and money, it could also help you avoid unpleasant surprises, time-consuming lawsuits, and the considerable pain associated with having to start over.